Business Insurance for your startup

By Compuquotes Team on April 19th, 2008

Many people like to wait until their business is established before buying business insurance, thinking that they'll save money during their critical early days and that they can always get the insurance that they desire later. While this can be a good way to keep some expenses low while your business is still trying to get off of the ground, if you don't have the proper insurance and something unexpected happens then you might end up going under because you simply can't afford to cover the unexpected costs. In spite of the costs, there are a number of advantages to going ahead and buying business insurance for your startup early.

The biggest advantage, of course, is that there are some types of business insurance that may be required by law depending on where your business is located. Every state requires that you have workers' compensation insurance for your business in order to protect your employees, and some locales may require liability or other insurance as well. By going ahead and deciding to purchase business insurance you can learn about any local insurance requirements from your insurance agent before you find yourself in a situation where you're facing legal troubles for not having it.

Another advantage to buying business insurance early is that it can assist you in securing much-needed startup funding. Some investors and lenders will be much more willing to consider your business for loans or investments if they're sure that their money will be protected; having insurance shows them that even in a worst case scenario you won't suffer financial loss due to fire or other disasters which might otherwise cause your startup to be shut down for an extended period of time.

Depending upon the types of business insurance that you buy, you can protect your business from lost income when the unexpected arises. Specific types of business insurance are designed to protect cash flow when things go wrong, providing you with much needed money to pay employees and repair or replace equipment if necessary. This insurance will keep money moving through your business when it would otherwise have stopped, and this can mean the difference between staying in business and going under during the critical start-up phase of your business.

One other big advantage of buying business insurance for your startup early instead of waiting until after you're more established is that it can be a lot easier to get the money for the insurance when you're still taking on your initial loans and investments. By including the cost of your insurance in with your startup cost estimates you can make sure that you'll have the coverage that you need from the very beginning. This will let you focus on running your business and helping it grow instead of worrying that there will be some unavoidable problem that you won't be able to afford to take care of, and you won't have to worry about trying to raise additional money to take out the insurance policies since the money has been allocated for them in your business plan since the very beginning.